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Gulf oil producers could end a long-standing rift on terms for a single currency next year and it could be ready by the end of 2009, according to reports.
Monetary officials from the six Gulf Co-operation Council (GCC)Gulf Co-operation Council (GCC)
countries will meet in Doha tomorrow.There they will discuss the remaining issues needed to reach agreement on the type of currency, its name, peg and date of issue.
GCCGCC
sources confirmed tomorrow's meeting, but said member states had yet to agree on the name of the proposed currency and whether it should be pegged to the dollar or a basket of currencies comprised mainly of the US currency."Of course there has been remarkable progress about this issue but more work is needed because we do not want to rush," said a source at the Riyadh-based GCCGCC
Secretariat. "We hope to be able to sort the remaining issues in the next period as more meetings are planned this year and next year."In a report from Doha, the Qatari Al Sharq Arabic language newspaper said yesterday it expected the six members to sign an agreement on a single currency next year and it could be ready by the end of 2009 before it goes into circulation.
Quoting a GCCGCC
finance source, the paper said the group's Monetary Council would endorse decisions on the issuance of the new currency, including its name, value, exchange rate, peg, denominations, specifications and design."Companies are expected to be invited next year to submit their bids for the design of the new currency. A shortlist will then be devised before the best design is selected," the paper quoted the source as saying.
"This will be followed by final approval of the new currency, which will then be printed and distributed to central banks in member states. This is expected to be completed by the end of 2009. The next move will be to prepare the public and the markets for the single currency and set a date to launch it into circulation."
According to GCCGCC
sources, the proposed currency could remain attached to the dollar in its early stages before the UAE, Kuwait, Qatar, Saudi Arabia, Bahrain and Oman switch to a more balanced basket of currencies.At talks in Doha early this year, GCCGCC
Central Bank Governors agreed on the formation of a monetary council that will pave the way for the creation of an EU-style GCCGCC Central Bank which will decide on the joint currency. The UAE, the second largest Arab economy, has said it is pushing to host the Central Bank. Except for the Kuwaiti dinar, which is pegged to a basket, the currencies of the other five GCCGCC members are attached to the dollar, the price of their oil exports. A draft framework of the GCCGCC
monetary council published recently stipulated that the joint Central Bank must be founded at least six months before the issuance of the common currency. Once it is issued, the currency will have a fixed exchange rate against local GCCGCC currencies for a transitional period, during which those currencies are gradually phased out.Members of the GCCGCC
technical monetary body will tomorrow discuss the remaining points on their agenda, which includes unification of all monetary and fiscal standards in the GCCGCC.UAE Central Bank Governor Sultan Al Suwaidi last week said GCCGCC
monetary union could be launched on time but in stages.By Nadim Kawach
© Emirates Business 24/7 2008
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The eurogulf and FreeGold
FreeGold means the marking of the gold reserves to market like the European Central Bank (ECB), not to model like the US Treasury.
The euro has a gold component and a paper component, but puts a “firewall” between the two such that gold’s valuation as a wealth-preserving asset cannot be pulled lower by the inevitable inflation of the paper component of circulating currencies. It is the marking to market (MTM) of gold reserves which provides that wall.
Here’s a summary (the edited full text is available here
http://www.ecb.int/press/pressconf/2008/html/is080904.en.html#qa
) of what Jean-Claude Trichet, president of the ECB had to say on Thursday 4 September 2008, at the press conference after the decision of the Governing Council of the ECB to leave interest rates unchanged, about how the eurogulf-currency will achieve FreeGold during the course of 2010. (Trichet speaks only of, for, and in name of the euro, of course.)
The ECB’s primary goal is delivering [and then maintaining] price stability over the medium term (the necessity to avoid broad-based second-round effects stemming from the impact of higher energy and food prices on price and wage setting behaviour should however not be overlooked.)
Price stability will be delivered in the course of 2010.
Ivo repeats:
Price stability will be delivered in the course of 2010.
Trichet again:
This means that during the course of 2010, the ECB will be back to its definition of price stability and the ECB is credible when it is says that.
I, Trichet, have noted with extreme attention that the US authorities have said that a strong dollar is in the interests of the United States of America.
Trichet: what the USA authorities say is important, I was therefore attentive, even though market participants were less attentive.
In the recent past / very recently,
(and taking the risks to price stability and the necessity to take broad-based second-round effects
stemming from the impact of higher energy and food prices on price and wage setting behaviour into account) we [the Governing Council of the ECB] increased rates in order to reach the goal of achieving price-stability over the medium term, that is, in the course of 2010.
This means that during the course of 2010, inflation will be in line with price stability.
Ivo: this means that FreeGold will be achieved in the course of 2010.
I do not want to be more precise, but this is the moment, said Trichet.
Ivo:
Trichet did not want to elaborate on how this would be achieved.
And nobody from the independent press was allowed to ask the FreeGold-question.
FreeGold will be achieved in the course of 2010.
link again
http://www.ecb.int/press/pressconf/2008/html/is080904.en.html#qa [Report Abuse | Email to a Friend | Reply to this Comment]